An easing in trade tensions between Brussels and Washington has perked up Germany’s elite DAX 30 stock index.
The threat of tariffs on imported cars cast a cloud over German shares, given the centrality of the country’s motor industry to its economy.
US President Donald Trump declared the scale of car imports into the United States to be a threat to national security.
A who’s who of German industry
But on Friday he paused the imposition of tariffs on vehicles from the European Union and Japan for 180 days to give time for negotiations.
The DAX lost a little ground this morning, to trade at 0.57% down at 12,169.42, but was up on its level of a month ago - at 12,167.13 on 23 April – when tariffs seemed certain to be imposed.
And it is noticeably higher than three months ago, when the DAX stood at 11,066.41 on 20 November.
But it is still lower than a year ago, when the DAX stood at 13,169.92 on 22 May.
The index contains some of the best-known names in German industry. They include sportswear group Adidas, financial giants Allianz, Commerzbank and Deutsche Bank, pharmaceutical groups BASF, Bayer and Merck and carmakers Daimler, BMW and Volkswagen.
On Friday, while holding off on imposing tariffs, Mr Trump renewed his complaints about car imports from Europe, saying the EU “treats us, I would say, worse than China, they are just smaller”.
“They send Mercedes-Benz in here like they are cookies. They send BMWs here. We hardly tax them at all.”
“Prepare for the future”
He has complained that the scale of imports from the EU and Japan is undermining the ability of America’s carmakers to invest in research and development, adding: “Domestic conditions of competition must be improved by reducing imports.”
Mr Trump wants the 180-day breathing space to be used to negotiate a cut to the number of imported vehicles, but neither the EU nor Japan seems willing to agree to this.
EU trade commissioner Cecilia Malmstrom said any attempt to impose quotas would violate World Trade Organisation (WTO) rules, while Japan’s economy minister Toshimitsu Motegi said: “Japan opposes any measure that distorts free and fair trade.”
But it warned: “Looking beyond these positive cyclical developments, unfavourable demographics will soon weigh on potential growth and put pressure on public finances. Having already accumulated sizable buffers through savings, Germany should now prioritise domestic investment in physical and human capital to prepare for the future.”